Iranian oil adviser reminds group of production mistakes made in 1998 which sent crude to levels below $10 per barrel By Andrew Critchlow, Commodities editor2:27PM BST 12 Oct 2014 Oil prices will slump further if the Organisation of Petroleum Exporting Countries (Opec) repeats its mistakes of the 1990s and fails to cuts its production fast enough to cope with a glut of crude now flooding the international market, Iran's Oil Ministry has warned."In 1998 inadequate reaction by Opec sent oil prices to as low as $6 to $8 per barrel," said Mehran Amirmoeini, a top energy adviser, quoted by the official Iranian Oil Ministry news service. “When the market is faced with falling demand and simultaneously rising supply, naturally some countries try to absorb customers by offering discounts.”Saudi Arabia and Iran, the two dominant forces within Opec, have both slashed their contract prices for crude shipped to Asia in the last few weeks amid a price war escalating amongst the world's biggest producers to grab market share.Brent crude - a global benchmark comprised of oil from 15 fields in the North Sea - fell briefly to a four-year low under $90 per barrel last week after it emerged that Saudi had boosted oil production by 100,000 barrels per day (bpd) last month.The move by Saudi Arabia comes amid growing signs that Opec - a group of 12 mainly Middle Eastern producers who control a third of the world's physical supply - is divided over how to manage the recent decline in prices and the erosion of their market dominance by shale oil drillers in the US. Gulf states led by Saudi Arabia and the United Arab Emirates are resisting calls to convene an emergency meeting ahead next month's planned gathering of Opec when the group will decide on its production quotas heading into the northern hemisphere winter, a period when global supplies can become tight depending on the weather.Iran also caused confusion in the market last week when it back-tracked on an earlier call to bring together Opec early to arrest the price decline.However, divisions in the cartel are deepening after Venezuela - the major South American producer - call last week for the meeting scheduled for November 27 to be brought forward."The oil market is gradually beginning to panic," said Commerzbank analysts in a note to investors. "The price slide has doubtless become more speculative in nature of late as the deteriorating global economic outlook, growing risk aversion and ample supply prompts more and more market players to bet on falling prices."Opec has currently set its production ceiling at 30m bpd of crude and a decision to cut by around 500,000 bpd to balance the market if taken would be its first decision to trim output since December 2008.However, some analysts have suggested that Opec's biggest producers may be targeting lower oil prices in a move to win back market share from high-cost producers.The boom in shale oil in the US has reduced the cartel's share of the market in the world's largest economy. Recent research from Deutsche Bank has suggested that 9pc of US "tight oil" would be uneconomic at prices below $90 per barrel and around 40pc if the prices slips below $80.

---Iranian oil adviser reminds group of production mistakes made in 1998 which sent crude to levels below $10 per barrel---...